Manchester City have been cleared of any wrongdoing regarding the signing of Benjamin Garré by the court of arbitration for sport, clearing the way for Pep Guardiola to enter the summer transfer market with an expected minimum budget of £200m.

The 17-year-old Garré joined City after leaving Vélez Sarsfield, of his native Argentina, just after his 16th birthday in July 2016. Fifa dismissed an initial complaint from Vélez regarding the move, the club claiming that City acted unethically in approaching Garré when he still 15, then broke transfer regulations by signing him when he turned 16.

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After world football’s governing body ruled that Garré’s Italian passport meant he was free to join City, the club took their case to Cas, arguing Fifa had broken their own rules. A statement from Cas on Tuesday confirmed that the appeal had been dismissed.

“The appeal filed on 12 December 2016 by Club Atlético Vélez Sarsfield against the decision issued on 24 August 2016 by the single judge of the sub-committee of the Fifa players’ status committee (the challenged decision) is dismissed and, accordingly, the challenged decision is confirmed.”

If the new Premier League champions had been found guilty they would have faced a transfer ban, meaning Guardiola would have been unable to strengthen in the close season should the embargo have started with immediate effect.

Yet the manager is now free to enter the summer market and with Yaya Touré to depart in the summer and Fernandinho turning 33 next month, Guardiola is targeting a defensive midfielder. While Borussia Dortmund’s Julian Weigl, 22, is thought to be under consideration, the manager is also targeting a wide forward, after missing out on Arsenal’s Alexis Sánchez in January, and may move for another central defender, given Vincent Kompany’s injury proneness.

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Guardiola can expected to be handed a budget of at least £200m by the City hierarchy as he bids to retain the title and claim the Champions League, following the disappointment of being eliminated at the quarter-final stage by Liverpool.

Meanwhile, Sergio Agüero underwent surgery on his meniscus on Tuesday morning, with City’s top-scorer hopeful of being fit for Argentina’s Russia 2018 World Cup campaign.

The 29-year-old tweeted: “Recovering from an arthroscopy on my knee. Fully motivated to get back soon to the field.”

Agüero, who has 30 goals for City this season, last played in last Tuesday’s 2-1 Champions League defeat to Liverpool at the Etihad Stadium.